A group of Britain's leading economists have told the Chancellor he needs a "plan B" on the economy - which the shadow chancellor told Sky News is "stalling".

Writing in The Observer, the experts criticised George Osborne's strategy, and said he has not made plans for the flat economic growth of the past six months.

Speaking on Sky News' Murnaghan programme, shadow chancellor Mr Balls said "we were told we were out of the danger zone".

He added: "We are now seeing week by week more evidence that the economy is stalling."

He said all parties agreed the deficit had to be reduced, but warned that if it happened too quickly, the economy would get weaker.

"The lesson history teaches us is it sounds good to hear a chancellor say 'I am going to stick to my plan.'

"But if that plan is not working, they should change course," he said.

Mr Balls also said he felt the Labour party did not do enough to regulate the banks when it was in power.

He said he was proposing a tax on bankers' bonuses to go towards a fund to help get young people back into employment.

Mr Osborne's critics include signatories of a letter to the Sunday Times last year which supported the Conservatives' approach, as well as the former chief economist at the Cabinet Office Jonathan Portes.

Mr Portes, who is now director of the National Institute of Economic and Social Research, said: "You do not gain credibility by sticking to a strategy that is not working."

He added that the Government could only partly blame factors out of its control such as rising oil prices, the poor recovery in the US and the Greek debt crisis.

"It isn't just about the international environment, it's because of the strategy the government has followed," he said.

Vicky Pryce, the former head of the Government's economic service, predicted ministers may need to prepare for a U-turn: "It's a very risky situation, and I think personally that at some stage they'll panic."

Britain's economy grew by a sluggish 0.5% in the first three months of this year but inflation rose by more than expected to 4.5%.

In the letter to The Observer, economic experts demanded the "plan B" include proposals to boost jobs and growth, instead of sticking to deficit targets.

They recommended a crackdown on tax evasion and higher taxes on the rich to create jobs and boost economic growth, saying: "These are the foundation of a real alternative and it is time the Government adopted it."

But Conservative MP Mary Macleod told Sky News: "I do not think George Osborne should change his plan at all. We inherited a huge deficit so had to act.

"We do not expect to change things overnight, we can not change 10 years in 10 minutes so it is going to take time."

What a crock, the facts are there never will be a 'recovery' if the PTB get their wish of fully shipping all industry out of the First World. No industry, no products, no sales,no near full employment, no recovery. You cannot shake money around in a service jar and magically create more money. A nation needs to MAKE products and this must evolve as much manpower as possible being paid at a job under what ever terms and by what ever means, so that they can buy products in the market. Minus this you will have nothing more and nothing less than shifting money around in a box. Any recovery that does not include retooling industry to rehire men to restart the economy is a fraud and no recovery at all.

This criticism of the apparent Anglo-American political strategy to marginalize the jobs and wages crises with an overemphasis on deficit reduction has also begun to assert itself in the United States, though it is primarily confined to various progressive/liberal media outlets. I'm not sure if this will become part of the national dialog in either country, but nevertheless anticipate renewed emphasis amongst figures in the Democratic Party on the dire need for additional 'stimulus'. On that point, I don't expect any success in Washington unless the Democrats are able to take back the congress next year. Of course, then the probability of enacting a policy capable of actually stimulating growth in the overall economy is highly improbable. At best, it will accomplish what the last attempt at stimulating the economy did — sustain some moribund jobs and programs for a bit longer.

With respect to the point of the need to reassert manufacturing in the national economies of the Global North, I largely agree. Of course, the question then becomes how we pursue that agenda. Conventional proposals generally center around the re-institution of a robust tariff policy. The problem there is that the proposals tend to stop at that point. Now, it would still take many years (decades perhaps) to reintroduce the capital necessary to begin manufacturing at any meaningful level. Then there is the wage problem. The present state of the labor market compounded by the current state and character of our domestic labor unions are such that we cannot reasonably expect to see any associated jobs produce the sort of purchasing power and security that such employment promised during the so-called golden age of capitalism.

Then there is the question of intermediary economic problems. What do we do while we await the reemergence of the domestic manufacturing sector? The only reasonable thing for the government to do would be to exponentially increase the tax burden on concentrated wealth and use the associated revenue to channel into some redistributive policies. (On this point, many tend to favor the establishment of public works programs, though I would argue that programs are not particularly essential and could just as easily go towards such things as providing adequate stipends and tuition assistance for individuals interested in pursuing post-secondary educations; providing single parents with incomes that would enable them to remain at home with their children and in turn help to revitalize the American family, etc.) There are really many important things that could be accomplished through this, but of course we cannot reasonably expect for this to even be discussed by policy makers. Therefore it is just as futile to expect domestic manufacturing in a modern capitalist economy to rebuild a robust middle class.

Given these facts, I think any concerned individual would do well to abandon too much focus on such utopian notions and instead focus on developing revolutionary socialist organizations. For only through the abolition of the bourgeois state can we reasonably expect any adequate political response to these sorts of economics questions.

Last edited by Admin on Sat Jun 11, 2011 3:05 am; edited 1 time in total

This criticism of the apparent Anglo-American political strategy to marginalize the jobs and wages crises with an overemphasis on deficit reduction has also begun to assert itself in the United States, though it is primarily confined to various progressive/liberal media outlets. I'm not sure if this will become part of the national dialog in either country, but nevertheless anticipate renewed emphasis amongst figures in the Democratic Party on the dire need for additional 'stimulus'. On that point, I don't expect any success in Washington unless the Democrats are able to take back the congress next year. Of course, then the probability of enacting a policy capable of actually stimulating growth in the overall economy is highly improbable. At best, it will accomplish what the last attempt at stimulating the economy did — sustain some moribund jobs and programs for a bit longer.

Why would the Democrats -- a party founded by rich industrialists and slave owners by the way -- do anything to fix the current state of affairs? No any action will have to come from a strong minority third party that can play king maker in elections -- this can be accomplished by bringing the mostly working class base of the two parties together into a more or less populist voting block most readily in the current American political landscape, IMHO. It would work best by concentrating on small voting districts and basically taking lower offices instead of attacking the duopoly on the national level head one out of the gate. In some voting districts you are talking about 200 votes -- not hard to convince 200 people that thieves are thieves, heh? And even the smallest victory out of the gate is a moral boaster and a point of reference. A party -- or voting block, or citizens alliance, or what ever you want to call the organized masses -- with one person that has state -- in its broadest sense -- power no matter how insignificant, is a party on its way forward. Any office taken is taken and any win is a win. Victories feed on victories,after all. Then if you deliver on your promises; you have loyalty and a loyal base, and you are on your way to confrontation with the system, victory will go to the side that is favored by right, and all that good action.

I predict that something like this will happen in the next few years, maybe a decade at most. The center of the American 48 will start to unite in something like the populist movements of old but rather more serious, and if this center can be made sound, it can hold, weather the coming storm -- that being the dissolution of the imperium Americanum -- and take power,after the interregnum that will surely come.

Already among vast segments of the rural, poor and working classes there is total disgust with both parties, and between these people you have not only a functioning economic system ready made and with little difficulty ready to function at least at a barter level, but also the manpower -- perhaps, 25-30 million NOW and upwards of 45 million males total -- for a party to literally beat all other parties into submission, as a prelude to fixing society as it were. Until this is done all else is hypothetical and debatable, but that this needs done is obvious to everyone NOT in DC.

The 'Two Party' oligarchy needs to go and new means of divining the will of the people need instituted. Nothing will change unless these things happen, and they can only happen if the illusion that the Dems or Reps serve their respective bases is destroyed and their erstwhile bases make common cause, against the oligarchs and their false parties and the institutions such as banks, corporations, and the courts, that facilitate and support all of the above. Also this would expose the class and wealth divides in the Democratic and Republican parties --why should be believe this rich Mother Fers care about us?? Crude? Yes but effective. -- and force the populist minded less oligarchical second tier of could be leaders to either side with the people or with the parties in power.

With respect to the point of the need to reassert manufacturing in the national economies of the Global North, I largely agree. Of course, the question then becomes how we pursue that agenda.

Everything needed to rebuild is here and ready to be used, what is lacking is the conception of us being a whole and the will to use those resources to those ends; will not means is the lacking component. There are thousands of useful items that could be made RIGHT NOW by doing nothing more than providing stock and manpower to the idle plants and using these to retool the rest. And an area as large as America can become more or less self sustaining especially if the food that was sent overseas as foreign aid is put back into domestic uses or the land utilized for other crops, that provide raw industrial stocks like flax and hemp. This puts further people to work,and makes for more durable tough citizens. Hard work is a good thing if it is viewed as a good thing after all.

Conventional proposals generally center around the re-institution of a robust tariff policy. The problem there is that the proposals tend to stop at that point. Now, it would still take many years (decades perhaps) to reintroduce the capital necessary to begin manufacturing at any meaningful level.

I fail to see why this need be a problem for it to take decades IF the current remaining heavy industry and mineral/petroleum/chemical industries are nationalized and intelligently controlled to produce the desired ends on a 20 year provisional basis, after which some sort of equitable arraignment for the ownership could be worked out by the people themselves, by plebiscite preferably. Sure everyone would have to tighten up, but then everyone would have a common bond, would they not? Hard times make for hard peoples. And what often goes unnoticed is that lack of material distractions also make for the moments in which people can share and be kind and form bonds above those of having a common tax collector and buying the same corporate made junk. if propagandized properly such a tightening could be seen as a gain and thus a good thing for the inner people that make up the outer collective.

Then there is the wage problem. The present state of the labor market compounded by the current state and character of our domestic labor unions are such that we cannot reasonably expect to see any associated jobs produce the sort of purchasing power and security that such employment promised during the so-called golden age of capitalism.

I agree that the present unions are largely employer unions and to a vast extent corrupt. The solution is in the problem, the union is corrupt, but the idea of collecting together to use force of numbers to gain and keep protections, rights and the like is sound; so collect together outside of the union and make it antiquate. Working man's halls have worked before, as have self-help collectives, nothing stops them from working again but the fact that it is NOT being done.

And further as I said above a bit of suffering is not necessarily a bad thing for the morals and ethics of a people, we are a bit to fat and need to get more lean at any rate. The west is where it is at because we became soft, plain and simple. Our minds became boggled on trifles while the shop was looted 44 ways from Sunday; it is time to get back to keeping what is important in the front of the mind. There is NO way towards utopia, nor would I want to arrive at any such fantasy land,decadence and plenty produce decadent peoples who are always weak, not my cup of tea thank you. Fully housed, well enough feed and ideally fully working and at least nominally civic minded participating citizens that have at least some loyalty towards the state -- the resources, but not yet the Will to have such a thing exists and should be at least attempted in my estimation. This would at least be a step up from this CF we have now, which is after it is all said and done a tax zone with mail service more than a nation or even an imperium -- its a business model and little else.

Then there is the question intermediary economic problems. What do we do while we await the reemergence of the domestic manufacturing sector?

Go without what is not necessary and produce what is as best as possible, but GO without all and one and have all and one. Leadership that actually suffers with the masses, lives at the same basic level and has the same basic goals and aspirations will have loyalty and even may I say it love, and if any such leadership is present a mass of people will suffer a great deal more than they will otherwise. North Vietnam is a good example of such a phenomena in practice.

The only reasonable thing for the government to do would be to exponentially increase the tax burden on concentrated wealth and use the associated revenue to channel into some redistributive policies.

By redistribute are you meaning wealth, or income, or capital? Since of course it is best to have as many people creating wealth as possible and this requires some capital -- land at a minimum to be realistic -- but income redistribution is not necessary good in the long term and only ameliorates the problem to my mind. Basically I favor teaching the masses to fish and giving them poles and tackle to start out as fisherman rather just giving them fish. Dependable people rather than dependent peoples.

(On this point, many tend to favor the establishment of public works programs, though I would argue that programs are not particularly essential and could just as easily go towards such things as providing adequate stipends and tuition assistance for individuals interested in pursuing post-secondary educations; providing single parents with incomes that would enable them to remain at home with their children and in turn help to revitalize the American family, etc.) There are really many important things that could be accomplished through this, but of course we cannot reasonably expect for this to even be discussed by policy makers.

Land, Food, Work: with these three things all else can follow, and the means are here NOW to make those three things secure for vast numbers of citizens effective withing weeks. And I agree with the current policy makers nothing good will happen; but they need not remain forever.

Therefore it is just as futile to expect domestic manufacturing in a modern capitalist economy to rebuild a robust middle class.

Not necessarily, your conclusion is too strong for the facts and while a possible answer not the necessary one. Also why would you assume I want a modern capitalist economy to remain after the retooling? Also WHY even rebuild the middle class? Why not seek to go a new route, with new values and new ideals that do not include the American middle class consumerist fantasy of human happiness by consumption of one new false hope after the next in a never end series of wasted time, effort and resources? Surely something better is possible, yes?